"Market Monitor"- Dr. Hans Black, Chairman of Interinvest
Friday, October 24, 2008PAUL KANGAS: My guest market monitor this week is Dr. Hans Black, chairman of Interinvest, a global money management firm with offices in Switzerland, Canada, Bermuda and Boston. Hans, welcome back to NIGHTLY BUSINESS REPORT.
DR. HANS BLACK, CHAIRMAN, INTERINVEST: Thank you. Thanks for having me.
KANGAS: You travel the globe visiting clients. What countries, in your opinion, are experiencing the worst financial crises?
BLACK: As you know, Paul, it is all over the world. It's global. It's certainly all over Europe and in a huge way in the last, two, three weeks, enormous bailouts on a per capita basis, much larger than what we've had in the United States. Eastern Europe I think is a big worry, Hungry, Poland, some of the former CIS countries, the former Soviet Union, Ukraine, I think, is an issue and finally, I'll mention Korea, which we're very concerned about. Korea is one of the top 10 economies in the world and there seem to be some big issues there with the currency and the banking system.
KANGAS: How does the United States rate, Hans?
BLACK: We think the U.S. is actually ahead of the curve. For all of the criticism that we hear, I think we've done the right things here in the banking system over the last two, three weeks, got off to a slow start, but I think we're getting it right.
KANGAS: Is all the volatility we've been seeing on Wall Street a market bottom? Or what do you look for to signal that to you?
BLACK: It may be. We're seeing a lot of values. We think this market in many sectors is really cheap, in healthcare and certain technology companies, a few energy companies even. We think we're going see an enormous rally at some point between now and the springtime.
KANGAS: A lot of money sitting on the sidelines, wouldn't you agree?
BLACK: That's correct.
KANGAS: Why hasn't gold, a so-called save haven, been rising in this debacle we've been having?
BLACK: Well, I think gold has been like anything else. It's been a source of cash. Stocks have been absolutely destroyed all over the world. I mean this is the worst year for equities since 1931 and so gold has just been a source of cash for people that have had to raise money, particularly for some of the derivative payouts to do with credit default swaps.
KANGAS: Do you still like it for the long-term?
BLACK: Absolutely.
KANGAS: OK. What are you telling your clients to do in this unnerving environment?
BLACK: As you know, we were lucky enough to have said to get out of banks quite a few years ago -- perhaps too early, but we like healthcare. It has been the core of our portfolios. It has done well for us. We continue to like it. It is amazing to see stocks actually go up this year in that sector. And we like certain technology companies. But we're concentrating our portfolios right now in the United States and to some degree now, in the UK.
KANGAS: On your last visit in late April, you had four buy recommendations for our viewers. Let's see how they've done since then and I guess we know, everything is down, Schering Plough (SGP) and SIRF Technology Holdings (SIRF). Are you still with those two?
BLACK: Yes. We still like them and Schering is a great company. It's run by we think one of the best CEOs in the drug industry and we would absolutely stay with it.
KANGAS: And then we had two others, Novell (NOVL), which is down 36 percent, Affymetrix (AFFX). Do you still like those two stocks?
BLACK: Yes, very much so. Novell has a lot of cash on their balance sheet. It's a great company.
KANGAS: OK. How about some new recommendations, Hans?
BLACK: Well, I'll tell you, we're buying Microsoft (MSFT), which we think at these prices is very cheap. It is down 50 percent from where it was about a year ago. A lot of cash, good products and P/E ratios now which nobody would have believed 10 years ago.
KANGAS: MSFT.
BLACK: That's right. Bristol-Myers (BMY) we think is very, very cheap, a well-run company again in the drug area, which we like. And finally, I mentioned energy. We like El Paso (EP), which is a stock that we had about five years ago. It did very well for us and it has come way, way down.
KANGAS: Boy, has it ever, unbelievable, EP on the big board. It trades there on the New York exchange, does it not?
BLACK: That is correct.
KANGAS: All right, Hans, do you personally own any of the securities mentioned or have any other disclosures to make?
BLACK: No. I own them. I like them all.
KANGAS: You own them all. OK. We'll see at your next visit. I think we'll have a closer look and maybe a better result. Thanks for being with us once again.
BLACK: Thanks for having me.
KANGAS: My guest, Dr. Hans Black, chairman of Intervinvest.
